Mixed outlook for property in H2

Industry players are bracing for the impact of the US and Europe debt debacles

The outlook of the property market is mixed, with developers reporting firm sales while property agents report tell-tale signs of a slowdown in certain market segments.

Rahim & Co executive chairman Datuk Abdul Rahim Rahman said: “The market is giving a mixed indication, but what is happening in the United States and Europe is very serious and will have an effect on this part of the world. For example, the take-up rates of newly-launched condominiums have been very encouraging with more than 60% sold just a few months after launching. However, on the rental market, leasing has been less active and rental rate has not increased that much.”

“The quick and healthy take-up rates reported by developers mean that people are still confidently investing despite the seriousness of the US and European debt issues,” he said.

He expects the number of launches to continue to be fairly healthy with good take-up rates, especially for those outside the Kuala Lumpur city centre

“The market is not saturated. Although prices of landed units may have gone up quite a bit, it is possible to buy detached houses at RM1mil in Shah Alam,” he said.

Senior vice-president Gerard Kho of real estate consultancy Reapfield, reckoned that the market might be rather flat when compared with the first half of this year and the whole of last year. The market during the last 18 months have been exceptionally buoyant and the full impact of the US-Europe problems were not factored in by the market then.

“We are not sure what will happen in the second half of this year, but we are taking a cautious stand,” said Kho.

He said the prices of landed units would continue to go but they are seeing a disparity between asking price and transacted price widening. This disparity was seen a couple of months ago, he said. Prices have gone up compared with the first half of this year but the increase was less.

“We expect this situation to continue - growing disparity between asking and transacted price,” Kho said.

As for the condominium market, excluding the KLCC and Mont' Kiara, prices have not gone down and rental remains strong. Kho said prices were flat in the Mont'Kiara and KLCC market.

The company was also seeing more listings coming into the market which means there were more units available now and buyers were waiting on the sidelines looking for a good buy, he said.

“But they are not going for fire-sale prices,” he said.

“People today will be buying at more realistic prices, unlike the first half of this year when they were prepared to pay more than the current market prices. As more stocks entering the market, the market may soften but despite that, high-rise units costing less than RM500,000 are expected to do well.

“If one is looking at the Klang Valley specifically, whether the market is up or down, there will be demand,” he said.

Kho said in terms of market activities, the first half of this year was the most buoyant compared with the Jan-June 2009 and Jan-June 2010 periods.

As for the healthy take-up rates, this may largely be attributed to the attractive lending terms offered by the banks together with the various rebates offered by developers.

In a 23-acre development known as Empire City next to the Lebuhraya Damansara-Puchong (LDP) by the Empire Group, a marketing agent reported that sales have been brisk with five to six units sold on a daily basis about two weeks ago.

Known as serviced office suites, the units are located on top of what will be a five-star hotel.

“This enables the buyer to apply for a 90% loan because this project is on a commercial title. If it were a residential title, he can only get 70% loan, if this is his third mortgage,” the agent said.

He explained that buyers need only pay a deposit of RM5,000. There is a 5% rebate. If a unit costs half a million, a buyer gets RM25,000 discount. He needs to pay the remaining 5% (RM25,000) upon signing the Sale and Purchase Agreement, less the RM5,000 booking fee. His initial capital outlay amounts to only RM20,000. The entire 23-acre development is expected to be completed by 2015.

Rebates have become a feature in today's launches and may be a sign of the competitive property market, particularly for condominium sales.

In a three-acre development in Jalan Kiara 3, near Mont'Kiara heading towards Segambut, Mitrajaya Homes group relaunched Kiara 9 Residency over the weekend. The completed project comprises about 200 units of condominiums and 16 units of 3.5 storey villas. The condominium block is 70% sold, the villas, 50% sold.

There is a 20% rebate for condominium units facing west, those facing east, a 12% discount and those facing another upcoming condominium block, a 15% discount.

Some of the discounts could go as high as RM200,000. Landed villas come with a 5% rebate.

As an indication, a 2,200 sq ft unit complete with cabinet fixtures and electrical appliances on the 10th floor facing another ongoing block of high-rise apartment is priced at RM1.7mil, and a discount of up RM256,000 has been given. - By Thean Lee Cheng (The Star)


August 8, 2011 at 11:31 AMcondomana

Dear Thean Lee Cheng,

"Rebates have become a feature in today's launches and may be a sign of the competitive property market, particularly for condominium sales."....This is not a sign of competitive market, stupid. "Rebate" is a tool to make speculation convenient by :-

(1) jacking up property price to enable higher financing, then make a "rebate" for purchaser to cover the 10% S&P deposit. Voila! "zero-down" scheme!!

(2) Making it convincing to sell at a higher price later in the resale market as the price indicated in the S&P is already 5-10% higher then what's actually paid!! (who remembers about the rebate 3 years later when OC obtained?? not to mention by then the developer would have been selling the "remaining" units at a "new revised" price!!) That's why speculators keep coming back for more!!...:D

This is only one of the many "tricks" that developers deploy to maximize sales and profits. If the authority is really serious about stopping property speculation, they should not just stop at 30-70 financing for 3rd property. Make these schemes illegal and send your people down to the field for enforcement.

August 8, 2011 at 7:25 PMPeople

Let the property bubble burst begins ... !!

Bursa Malaysia has now lost over RM65 billion in value from a week ago.

Reuters KUALA LUMPUR, Aug 8 — Malaysian stocks continued tumbling today with
an estimated RM31 billion in value shed from Bursa Malaysia, as jittery
investors spooked by concerns about the global economic outlook continued to
dump shares.
After the sustained sell-off today, sparked by concerns over Standard & Poor’s
downgrading of the United States’ credit rating and Europe’s persistent debt
woes, the KL share market is down an estimated RM65 billion in value from last

The benchmark FBMKLCI slipped 1.8 per cent to 1496.99, also a five-month low.

An estimated RM26 billion was wiped off the Kuala Lumpur stock exchange on
Friday after investors took their cue from the regional meltdown following last
week’s rout on Wall Street, the worst since Lehman Brothers collapsed in 2008.
Other Asian stocks continued to tumble today as S&P’s first-ever downgrade of US
long-term credit rating on Friday continued to batter already weak sentiment.

August 8, 2011 at 7:40 PMA coin can be a treasure

If you have spare cash, anytime is a good time to invest. If you don't have spare cash, anytime is also bad to invest.

Economic climate has no real meaning to those who invest carefully. For speculator, even at good economic environment, you can still fall.

It is YOU and YOURSELF who decide what kind of person you are.

August 8, 2011 at 10:23 PMWK

S&P: Asia would be hit harder by a second global crisis

SYDNEY — A new global financial crisis would hit Asia harder than the last one, especially nations heavily exposed to offshore markets
or still repairing budgets from the 2008-2009 crisis, credit ratings agency
Standard and Poor’s said today.
The agency, which incurred Washington’s wrath at the weekend by cutting its AAA
rating by a notch to AA+, said it was not predicting a rerun of the credit
crisis that crippled markets and tipped the world economy into recession three
years ago.
But it warned of more sovereign downgrades in Asia next time around, if its
assumptions turned out to be wrong.
“If a renewed slowdown comes, it would likely create a deeper and more prolonged
impact than the last one,” S&P said in a statement.

On that basis, it added, its historic downgrade of the US credit rating would
have no immediate knock-on impact on sovereign borrowers in the Asia-Pacific.
It cited the Asia Pacific region’s sound domestic demand, relatively healthy
corporate and household sectors, plentiful external liquidity and high savings
rates — though it listed New Zealand, Japan and Vietnam as exceptions to this.
The S&P statement took on a much darker tone when considering the possibility
that its assumptions were too rosy, noting that Asia still relied heavily on
exports to the West.
“Given the interconnectivity of the global markets, an unexpectedly sharp
disruption in developed-world financial markets could change the picture,” it
said, noting that the US and European economies could again contract or
“In this scenario, the experience of the global financial crisis of 2008-2009
shows that export-dependent economies with large exposures to the US and/or
Europe would feel the most pronounced economic impacts,” S&P said.
“It’s not likely things would be very different this time.”
“The adverse impact on Asia Pacific in that scenario would likely require
governments to use their balance sheets to support their economies and financial
sectors once again,” S&P said.
“And in our opinion, most governments would promptly oblige. But some of them
continue to bear the scars of the recent downturn — the fiscal capacities of
Japan, India, Malaysia, Taiwan and New Zealand have shrunk relative to pre-2008
levels.” — Reuters

August 9, 2011 at 7:26 AMObserver

Equity market will affect property market for sure
Bursa market is going to fall further as us fell more than 5 % again last night

USEuropeAsiaDow 10,809.85 -634.76 -5.55

August 9, 2011 at 7:56 AMTim

For sure, it will affect the lifestyle due to pay cut, no bonus, no OT, no increment, no promotion, no hiring, higher interest and high inflation.

August 12, 2011 at 10:52 AMHKMa

I would like to echo Condomans's observations of the market which I cannot agree more.

Developers are here to make a good profit - That is their ultimate aim. This is justfied in any business. However, many unsrupulous ones would say and do unethical things to boost sales. And their products are poor in quality in both design and execution.

Malaysia is not known for its transparency and fairness. Sometimes it is hard to know the transaction price of the secondary market. I asked some agents and they could not tell me the transacted price of certain properties which I enquired. Everything seems to be shrouded in mystery and the prospective buyers must be prudent in their decisions.

In my opinion, the properties in Penang have become overpriced, with ever increasing higher asking price but not matched by the amount of transactions. I asked about a particular property whihc is priced more than $1M more than a year ago, and recently I found out that there are still many unsold units. I think the market may not be as good as the developers claimed.

So buyers beware!